lets say i acquired a property for 100k in excellent condition and it has an apppraised value of 200k. i find a buyer that will pay the 200k for it and i make 100k in profit, i will have to pay the capital gains tax and be left with only 60k in profit i believe?
now lets say i season the property for 6 months and find a renter for that time. i refinance as much of the value as i can (typically its 80 to 95 ltv) and after the refi i find a buyer and sell it for 200k
will i have to pay capital gains on the amount i refinanced as well as the small profit i made on the sale?
if any of you guys need clarification pls let me know, and i appreciate any advice ???
If you buy and sell within 1 year, you will be taxed for a “short term capital gain”. This rate is the same as your personal income tax rate, so we really have no way of knowing how much that will be, nor do we know if you have to pay any state capital gains taxes.
If you keep the property for over 1 year, you will be taxed at the Capital Gains Rate - currently 15% + any state capital gains tax.
Under your two scenarios, there is little advantage to buyin and holding for 6 months. If you are going to buy and hold for tax reduction, you need to hold for at least a year.
Keith
thx keith
You’re welcome…
Keith